Friday, January 1, 2010

Top Five 2009 Celebrity Employer Mistakes (that could have been prevented with Proactive Lawsuit Prevention Strategies)

“It is said that only a fool learns from his own mistakes, a wise man from the mistakes of others.” (Anonymous)

As the year comes to a close, it is always educational, if not entertaining, to look back at the past and see the mistakes made by famed employers and how we can learn from them. Hopefully, we can gain wisdom in the process and avoid these mistakes ourselves. So, in honor of David Letterman, (see mistake #1) let's countdown the top five mistakes made by famous employers in 2009.

#5 Terminating A Protected Employee Without A Fair, Impartial InvestigationDodgers’ owner Frank McCourt fired his estranged wife Jamie McCourt as CEO of the team citing “insubordination” only 3 weeks after Jamie McCourt filed a workplace harassment complaint with the general counsel of the Dodgers. Despite the McCourt’s underlying divorce proceedings which taint the employment decisions, Frank’s terminating an employee without a fair investigation, while she was pursuing a workplace harassment complaint against the company, effectively also opened the door for a workplace retaliation claim. In California, that makes the Dodgers vulnerable to unlimited punitive damages should Jamie decide to pursue employment litigation in addition to her alimony requests.

#4 Allowing Emotional or Irrational Behavior to Dictate Business Decisions

Convinced that some employees stole from him, Guess cofounder, Georges Marciano initiated lawsuits that backfired when a judge instead ordered him to pay the accused employees $260 million dollars in damages. With alleged evidence of drug use and mental instability on the part of Marciano, the accused employees countersued for libel and intentional infliction of emotional distress. Then Los Angeles County Superior Court Judge Elizabeth White ruled that Marciano had refused to follow court orders concerning pretrial proceedings, threw out his case and barred him from presenting a defense against the countersuits. The only question before the judge and jury at trial was how much financial compensation the employees deserved.

#3 Post Termination Negative Comments about Former Employees

K2 Productions, which produces the Miss California USA Pageant, terminated Carrie Prejean's contract, citing "continued breach of contract issues." The termination spawned a lawsuit and countersuit by the parties which was eventually settled in a settlement agreement, approved by Donald Trump and K2 Executive Director, Keith Lewis. Post termination, Prejean had an interview with Larry King and walked off the set. Trump and Lewis made negative comments publicly about Prejean’s interview. Lewis stated, "The public is finally getting a glimpse of the real Carrie Prejean who lives in her own delusional world. The childish behavior, her negative attitude, the sarcasm and condescending tone, the disrespect and continual lying she is demonstrating now is only a fraction of what we endured during her reign and after." Commenting post-termination on an employee makes an employer vulnerable to a post termination claim of defamation, interference with future contract and also, presumably, a breach of the confidentiality agreement which accompanied their existing settlement agreement. Trump should have stopped talking after “You’re Fired.”

#2 Treating Your Employees as Your ConfidantesTiger Woods' caddie Steve Williams response to Tiger Wood’s infidelity scandal is that he supports his boss. Williams has been Woods' caddie the last 10 years. He refused to discuss Woods' private life, although he said the golfer had confided in him. "That's what friends are for," he told the New Zealand Herald. "You support them through good and bad. It's like marriage, really." Albeit unintentional, by treating his caddie/employee as his confidante, Tiger Woods inserted Williams as a witness to Woods’ own misdeeds. Although Williams may want to support his boss, under penalty of perjury pending litigation, Williams will ultimately be in the awkward position of providing damaging testimony against his own employer/friend if Woods ends up in a legal battle with his wife or sponsors. Many people spend more time with coworkers than family members, but there are times in a professional career where there must be a clear demarcation of roles, especially between a supervisor and subordinate. For example, if an employee wants to “complain” about the inappropriate behavior of another coworker, the manager’s role is to report the complaint to the person in the company designated to intake complaints and ensure they are investigated. Keeping the conversation “confidential” is not an option. Blurring the relationship lines in the employment setting can lead to deeply unsettling conflicts and increased employer liability.

#1 Undermining Company Policies With Inappropriate Behavior

David Letterman went on the air during is “Late Night” talk show and made jokes about his adulterous affair with a Late Night staff employee. Although he did this in order to deflate an expected extortion plot, his juvenile attitude not only undermined his show’s policy to maintain a workplace free of harassment, but also made him a target for other sexual harassment claims and sexual favoritism claims from his current and previous employees.